Supplier Performance in Supporting Our Businesses
Nowadays, supplier services and purchasing power are of major strategic importance to most companies. This is due to the fact that a substantial amount of the resources used by a company are made available through its suppliers. Suppliers are not only important in financial terms, but also to the aforementioned purchasing power of companies.
As Lars-Erik Gadde and Peter Fredriksson showcase in their research paper, Evaluation Of Supplier Performance – The Case Of Volvo Car Corporation And Its Module Suppliers, supplier performance has a considerable impact on the efficiency and effectiveness of the firm.
Generally, choosing suppliers in terms of chain supply is no different from choosing the companies that you want to buy products from. To choose the right suppliers, a company has to first observe, evaluate and only then, choose the most suitable suppliers that will become part of the supply chain.
In terms of production processes, the materials provided by suppliers determine the quality of the product. Customer satisfaction depends on the product, which is why high quality supplier services lead to high customer satisfaction.
The connection between companies and suppliers creates the supply chain. The supply chain represents the constant distribution of supplies by suppliers, which includes all aspects, goods, services and information.
Companies need suppliers who understand their goals and needs. The list below is comprised of a number of supplier criteria:
- Offering cost
- Credibility related to time-accuracy
- Flexibility in delivery
- Frequency in delivery
- Total of minimum delivery
- Quality
- Transportation cost
- Payment system
- Ability to share information
- Tax and Exchange Price
If we have already chosen the suppliers, we have to periodically select the supplier criteria. This evaluation is needed to maintain our suppliers’ performance level. The different ways of selecting supplier criteria are as follows:
- Define the supplier who gives the best quality supplies
The quality of supplies will influence the quality of the products. That is why, one should choose the best materials to create the best quality products.
- Maintain product availability
Sometimes, the products requested by the customers can be exchanged no matter the time. So, the company has to maintain their products’ availability to meet the customers’ needs at any time.
- Punctuality in delivering the supplies
The company must ensure that the suppliers deliver the materials in time, as the productions depend on the availability of materials. Consistency is very important, as it ensures that both the company and the supplier follow the agreement, and because through it the production process is well maintained. If one side breaks the agreement, the other side can terminate the agreement and look for another partner.
- The importance of cost production
The company has to manage the cost of production as efficiently as possible, because there are a lot of costs when it comes to production. There are maintenance costs, saving costs, transportation costs, and so forth.
- Setting the price
Both the company and the supplier should agree on the best price. The proper price is important for the continuity of their partnership.
- After sale services
It is important for the company to motivate the supplier by possibly giving him a bonus. This will maintain a good relationship between the two, strengthening their partnership.
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Tags: Business Strategy, operational performance, Supplier performance
